Details of the report were more encouraging. Orders for core capital equipment goods rose 0.4%, boosted by strong demand for machinery. Aircraft orders bounced back robustly.

"These are modest gains, but in an environment when businesses are worried by the economic outlook and possible credit crunch, we still see private orders gaining," said Stephen Gallagher, economist for Societe Generale. "The results do not much alter expectations that growth will be at 3.0% to 3.3% in the third quarter when reported next week."

Orders for defense goods fell 39%, the biggest decline this year. Military ships and planes are extremely expensive and orders tend to swing up and down month by month.

'The results do not much alter expectations that growth will be at 3.0% to 3.3% in the third quarter when reported next week.'
Stephen Gallagher, Societe Generale.

Shipments of durable goods fell 2% after a 1.9% drop in August, the largest decline in a year.

Inventories increased 0.4% while unfilled orders -- an early gauge of production -- rose 1.1%, with almost all the gains coming in civilian aircraft.

Despite a boom in exports, durable-goods manufacturing has shown little growth this year. Orders are up 0.4% in the first nine months of the year compared with the same period a year ago. Shipments are up just 0.1%. The figures are not adjusted for price changes.

In a separate report, the Labor Department said first-time claims for unemployment benefits remained elevated, with claims falling 8,000 to 331,000 last week. See full story.

The weaker-than-expected report on durable goods will likely have little impact on the Federal Reserve's decision next week about whether to cut the overnight lending rate again. The durables figures are notoriously volatile, and Fed policymakers are not likely to overreact to one or two months' numbers.

However, the weakness of capital spending has been a source of concern. According to many forecasts, capital spending by businesses was supposed to make up for growth lost from the shrinking housing market. In the second quarter, capital spending grew at a 4.3% annual rate.

'The report is indicative of sluggish investment spending," wrote analysts for Ried Thunberg ICAP in a note to clients.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.